FBAA calls for APRA to investigate property valuations

The Finance Brokers Association of Australia (FBAA) will ask APRA to investigate how mortgage valuations are calculated, as it believes buyers are being disadvantaged by valuations that are too low.

FBAA chief executive officer Peter White said brokers across the country have reported huge variations in valuations for the same property, sometimes by hundreds of thousands of dollars.

“This is not good enough. Valuations should reflect the true value of a property and incorrect valuations can in some cases prevent buyers from being able to purchase the home they want.”

Mr White said increasingly, lenders were using valuations based on computer-generated market averages, yet this doesn’t take into consideration the individual property.

“In the majority of cases, no one is physically visiting the property anymore, so valuations are being provided sight-unseen,” he explained.

“Every property is different in so many ways, which is why individual assessment will always be more accurate than a formula.”

A recent Queensland property purchased through an FBAA broker was given a valuation range of $350-$460K by a bank, however when the same property was assessed by three other online valuation companies, the valuations were $533-$643K, $537-$605K and $617-$695K.

“How can a property of this price range receive valuations that differ $345K between the lowest and highest?” Mr White asked.

He said it was time for the banking regulator to step in, and that the FBAA would be requesting that directly.

“APRA needs to investigate the Valuation Exchange (ValEx), as well as the arrangements between valuers and banks and how the data is calculated.”

ValEx has previously told brokers not to bother disputing low valuations as “only one or two per cent of valuers actually (change) the figure based on a dispute”.

“It’s time to review the model used for valuation assessments and allow a more effective dispute procedure.”